On Nov. 3, Texans will take to the polls to vote on seven propositions. Proposition 7 is an amendment to the Texas constitution that would divert up to $2.5 billion per year from the Sales and Use Tax and 35% of Motor Vehicle Sales and Rental taxes that exceed $5 billion to the State Highway Fund for the construction and maintenance of roads.
Proposition 7 supporters argue additional revenue is needed to address unmet transportation needs, but I believe all it does is fund a costly and ineffective congestion management strategy that will leave generations of taxpayers burdened with a growing fiscal crisis, trying to sustain the infrastructure left behind.
TxDOT reports a $4 billion gap while other sources such as Texas A&M’s Texas Transportation Institute (TTI), Texas Business Leadership Council and Move Texas Forward report a $5 billion gap. Where explained, the gap is described as $1 billion for repair and preservation of existing roads, $3 billion for new construction and $1 billion for areas of the state with heavy energy sector activity. New construction is justified as necessary for congestion management, anticipating 18 million additional Texan vehicles by 2040.
However, a critical examination of the Texas Department of Transportation‘s (TxDOT) expenditures raises concern about their strategic priorities and the consequences of increasing their budget allocation. Smart Growth America and Taxpayers for Common Sense released a joint report, Repair Priorities: Transportation Spending Priorities to Save Taxpayer Dollars and Improve Roads. Through analysis of data reported by states, the report found from 2009 -2011 that TxDOT:
- Spent 82% of capital spending on new construction, and just 18% on preservation and repair;
- There was an existing need of $4.6 billion for road preservation and repair of TxDOT managed roads;
- Annualized costs for preservation of roads in good condition is an estimated $22,285 per lane mile.
The methodology and findings from the report were reviewed and found reliable by former state DOT chief executives, senior infrastructure system managers and engineers at Pennsylvania Department of Transportation (PennDOT).
New road construction is often presented as a one-time expense, but every mile of new road construction burdens society not only with the cost of construction, but also the cost of preservation and repair. The American Road Transportation Builders Association reports new road construction costs up to $1.5 million per lane mile in rural and suburban areas, and up to $2.5 million per lane mile in urban areas. Construction costs are one-time, but preservation and repair costs are recurring for the life of the road. Assuming an average construction cost of $1.5 million per lane mile, annual preservation and repair costs are approximately 1.5% of the original construction cost.
State departments of transportation report annual expenditures for added capacity, repair and preservation, and other spending, including bridges, safety and road operations to the Federal Highway Administration. In 2011, TxDOT reported total expenditures for added capacity of $2.765 billion. The annual recurring preservation and repair costs on the capacity added in 2011 alone is approximately $4.1 million per year.
Proposition 1 passed in 2014. The 2016-2017 General Appropriations Act requires 70% of those funds go to added capacity and regional connectivity in rural areas (45% in urban areas, 25% in rural areas). The actual amount disbursed will vary by year, but the FY 2015 disbursement was $1.74 billion and the combined FY 2016/2017 disbursement is estimated at $2.5 billion. Although it is not clear what type of projects are included in regional connectivity for rural areas, if those are added capacity, Proposition 1 expenditures for new capacity during FY 2015 – 2017 will incur approximately $44 million in recurring expenses every year after those projects are completed.
An examination of TxDOT’s need for repair and preservation of existing roads raises additional questions about the necessity for new funding. TxDOT reports responsibility for 195,022 lane miles. Annual repair and preservation costs is an estimated $4.346 billion (in 2011 dollars). TxDOT reported a combined capital expenditure of $3.377 billion for new capacity and preservation and repair in 2011. Capital expenditures grew to $3.980 billion in FY 2012, $4.712 billion in FY 2013, and $6.443 billion in FY 2014. Capital expenditures contracted in FY 2015 to $6.017 billion and are projected to further contract to $4.923 billion by FY 2017.
The question then becomes, is TxDOT sufficiently funded? If TxDOT’s spending strategy is to preserve and repair the state’s existing roads, then yes TxDOT is sufficiently funded. The additional $2.5 billion per year or more from Proposition 7 can only be justified on a strategy of continuing to add new capacity.
Since TxDOT, the state legislature and Governor Greg Abbott have not presented a vision of what the state’s completely built out road network looks like, it’s reasonable to assume their intent is to continue the strategy of adding capacity, with the associated recurring costs for that capacity, indefinitely. This is the problem I have with Proposition 7, or any other legislation to generate new TxDOT revenue.
Congestion management remains the justification for indefinitely building new capacity. Contrary to popular perception, there is no evidence that added capacity is an effective congestion management strategy. Multiple strategies are available for congestion management, but U.S. metropolitan areas and cities of all sizes have relied almost exclusively on added capacity as a congestion management strategy. Yet, TTI reports congestion in the U.S. has steadily increased from 18 hours delay per commuter per year in 1982 to 42 hours of delay per commuter in 2014. I am not aware of a single U.S. city that has reduced congestion through a strategy of added capacity.
The claim that billions in new funding for capacity will reduce congestion is not supported by the evidence of history. What is supported by evidence is that billions of dollars in new capacity each year will strap taxpayers with tens of millions every year of never ending costs for preservation and maintenance.
*Top image: Loop 1604 and Highway 151. Image courtesy of Bexar County.